World

Geithner invites Republican counter-offer

From:
AP

December 03, 20121:17AM

US PRESIDENT Barack Obama is ready for tough concessions to reach a deficit deal, but Republicans must commit to higher tax rates on the rich.

That was the view of Treasury Secretary Timothy Geithner who made appearances on five Sunday talk shows to call on Republicans to specify what additional spending cuts they want in a deal to avoid the looming "fiscal cliff."

"The ball really is with them now," Mr Geithner, one of the White House's chief negotiators with Capitol Hill, said.

Mr Geithner presented congressional leaders on Thursday with Mr Obama's postelection blueprint for averting the combination of hundreds of billions in tax increases and spending cuts that will take effect beginning in January if Washington doesn't act to stop it.

But Republican House Speaker John Boehner dismissed the plan as "not serious," merely a Democratic wish list that couldn't pass his chamber.

As outlined by administration officials, the plan calls for nearly $US1.6 trillion ($A1.5 trillion) in new tax revenue over the next decade, while making $US600 billion in spending cuts, including $US350 billion from Medicare and other health programs. But it also contains $US200 billion in new spending on jobless benefits, public works and aid for struggling homeowners - and would make it virtually impossible for Congress to block Mr Obama's ability to raise the debt ceiling.

"I was just flabbergasted," Mr Boehner said, describing his meeting with Mr Geithner. "I looked at him and I said, 'You can't be serious?" The speaker, noting the short time between the November 6 election and the new year, said time has been lost so far "with this nonsense."

With the George W. Bush-era tax cuts expiring and across-the-board spending cuts hitting in under a month, Mr Boehner said, "I would say we're nowhere, period." He said "there's clearly a chance" of going over the cliff.

But Mr Geithner, also in interviews that were taped on Friday, offered a somewhat rosier view. "I think we're far apart still, but I think we're moving closer together," he said.

He called the back-and-forth "normal political theater," voicing confidence a bargain can be struck in time, and said all that's blocking it is GOP acceptance of higher tax rates on the wealthy.

"It's welcome that they're recognizing that revenues are going to have to go up. But they haven't told us anything about how far rates should go up ... (and) who should pay higher taxes?" Mr Geithner said.

He said so far, Republican proposals demonstrate "political math, not real math."

Republican leaders have said they accept higher tax revenue overall, but only through what they call tax reform - closing loopholes and limiting deductions - and only coupled with tough measures to curb the explosive growth of Medicare, Medicaid and Social Security.

But Mr Geithner insisted that there's "no path to an agreement (without) Republicans acknowledging that rates have to go up for the wealthiest Americans." He also said the administration would only discuss changes to Social Security "in a separate process," not in talks on the fiscal cliff.

As to spending, Mr Geithner said if Republicans don't think Mr Obama's cutting enough spending, they should make a counter-proposal. "They might want to do some different things. But they have to tell us what those things are," he said.

Republicans have also rejected Mr Obama's debt ceiling proposal. Mr Geithner noted it was Senate Minority Leader Mitch McConnell who first suggested it, as a temporary measure in the summer 2011 deficit deal. The administration would make it permanent. "It was a very smart way by a senator with impeccable Republican credentials to ... lift this ... periodic threat of default," Mr Geithner said. "And that's an essential thing for us."

Mr Geithner voiced sympathy for Republicans leaders, saying they're caught between the voters' endorsement of higher taxes on the rich and a House Republican caucus that thinks all tax increases are job-killers.

"They really are in a difficult position," he said. "And they're going to have to figure out their politics of what they do next."

In the past week, Mr Obama has held a series of campaign-style appearances - including one in a swing district in Pennsylvania - urging lawmakers to accept a Senate-passed measure extending tax cuts for all but the top 2 per cent of wage-earners. He'll continue the effort when he meets with governors on Tuesday and speaks to the Business Roundtable on Wednesday.

Republican leaders contend letting top-end tax cuts run out would hit small businesses and cost jobs.

Still, Republican Senator Lamar Alexander, said his party colleagues will "hold our nose and raise some revenues" if the result is a deal that reins in runaway debt. But he said the onus is on Mr Obama to knuckle down to talks.

"I'm ready for the president to get off the campaign trail, and get in the White House and get a result," Mr Alexander told reporters in Nashville on Saturday. "Right now he's got the presidential limousine headed toward the fiscal cliff with his foot on the accelerator."

Mr Geithner appeared on CBS' Face the Nation, NBC's Meet the Press, CNN's State of the Union, ABC's This Week, and Fox News Sunday. Mr Boehner was on Fox, too.

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